425: Darrell Lester—The Eight Letter F Word

Hey guys, this is the way I heard it.

You know me, and you probably know Chuck.

And if you don't, boy, are you in for a treat because Chuck and I are both here today, along with another, I don't want to overstate it, old friend, but another guest that I'm going to go ahead and call great.

Yeah, he's absolutely great.

He's a guy who has seen a lot about a topic that everyone is slightly familiar with, knows, but doesn't know a lot about.

And he knows a lot about it.

Spoiler alert, it's the publisher's clearinghouse.

Yes.

The people who have been sending you magazines or your friends' magazines.

I don't think you can be alive today and certainly be over like 20 and not know publisher's clearinghouse.

Did you ever fill the stuff out and unpeel the things and

me too?

I loved it.

I took a deep dive in it.

I found it both complicated and annoying,

but I thought the whole time.

It's promising, right?

Promising, you know, and I'm like, I'm getting a great bargain on some magazines and I have a chance to win a great deal of money.

Yes.

And so I did it, like with millions and millions of other people.

But oh my God, this guy, Daryl Lester,

has written a book called Downfall of an Icon.

And Daryl, in 1973, got hired right out of college.

He was a math major.

And this little Mon Pa company needed him to make some arithmetic sense out of their mailings.

He stayed for 30 years.

He became a senior vice president, and he had a front row seat to what happened that A, made this a multi-billion dollar company, and B,

the most beloved brand in the country for a time.

And then?

Not so much.

Yeah.

And then the most hated.

Oh, my God.

This is one of those stories that's kind of been right in front of you for years, but you probably don't know it.

He's been out of the company for a decade or two, and he's just decided the story is too good not to tell.

And he's right.

He's a really fun guest.

He's written this book that, you know, on a personal level, as I was reading it, man, I was just, I was so sucked in, not to the specific narrative he was telling, but by all of the little adjacencies in my life.

Oh, yeah, for sure.

Because I'm, you know, I sold out friends long before I had anything to bargain with.

You know, my first job on TV was QVC.

And before that, it was water purifiers out of the trunk and it was magazines over the telephone.

Computers.

Sure.

Yeah.

Sure.

So

there's a Willie Lohman in all of us, in my view.

And I think we're all salesmen to some degree.

And this guy certainly would agree with that.

We're calling the episode, what are we calling it?

The eight-letter F-word?

The eight-letter F-word, yes.

Because aside from the F-word you're thinking of right now, this one has eight letters.

It has eight letters, and it probably had a more shocking impact than the other F-word.

Kind of the beginning of the end of this F-word cost, yes.

It's a fun book.

He's a delightful guest, and I look forward to introducing you to

Daryl Lester.

Thanks, Chuck.

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Daryl Daryl Lester, 30 years, same company?

30 years, one company, right out of college.

I'm halfway through, full disclosure.

I'm loving everything, but the first thing I loved was the picture that you put up of you when you applied, and then your

what was it, I guess, your corporate portrait or something?

That is correct.

When I made vice president, they took pictures of us.

So, yes, that was 20 years later.

How many vice presidents were there?

Generally, had about seven.

Not a lot.

And vice president at Publishers Clearinghouse was a big deal.

Yeah.

Okay, so it's called Downfall of an Icon.

And I never do this, but there's so much about the book in the way you wrote it that kind of rhymes with the company and the way they sold.

their product.

It's very good.

It makes me want to turn the page.

I learned marketing from them, and they were the best.

Listen to this.

This is on the back cover.

The epic rise and shocking collapse of Publishers Clearinghouse is the ultimate treatise on American capitalism.

You start with a big claim.

I love it.

Brilliant innovation to fill a market need, leading to extraordinary profits, popularity, and philanthropy before eventually giving way to runaway greed.

Not just greed, runaway greed, and ruin.

Holy crap, dude.

So you're setting the hook on the back of this thing.

And then just indulge me for a second because I think this will really help the

listener.

Former PCH senior executive Daryl Lester was there for every step of this classic morality tale, from impressive benevolence and integrity to unconscionable profiteering, with comedy and carnage aplenty.

No one says aplenty anymore.

Very solid.

In the end, one of the most beloved companies in America, a dream maker at a time when people still believed in them, was overwhelmed by scandal and disgrace.

How did it happen?

Go behind the scenes with the only man alive.

who knows the whole story as he defies legal threats from former employers to take us on this gripping journey of fortune, fame, scandal, and collapse as an added bonus.

You'll be treated to prize patrol adventures, winner tales, and laugh-out loud antics of an impish yet brazen management team from a time gone by.

That's it in a nutshell.

That's a terrific piece of writing.

And the last thing in the book is the first thing I read.

And you got me, man.

You got me right out of the gate.

Okay, well, if you only read half of it at this point, the best is the second half.

You're still doing it, man.

You're still doing it.

You're teasing me with everything you do and say.

Everything is an invitation to turn the page.

Just telling the truth.

All right.

So, Downfall of an Icon.

Why'd you write it?

Why did I write it?

A couple of reasons.

There's so much misinformation about Publishers Clearinghouse from the press.

Almost everything you've heard from the press about PCH

is incorrect.

So I wrote it to set the record straight.

Secondly, it's a fascinating tale.

It's a small mom-and-pop company that became one of the most profitable private companies in America and,

quote, I say this in my book, the most beloved company in America at one time.

Only to become one of the most hated.

That's correct.

And there's proof in my book of that claim.

So

that's the start.

The third reason I wrote it was there's so much great comedy.

If it weren't for the comedy, the executives were very eccentric and very mischievous.

And there are stories about them that you couldn't do today in the business world.

These guys are giving talks, inspirational talks to the company in their underwear.

That's correct.

The whole company in his underwear.

That was our treasurer, Dan Doyle.

I saw him about a week ago, actually.

He's still around.

Now, was Katz still in the game when you started, or was he already out?

Mertz, sorry.

Mertz.

Mertz.

Mertz.

Harold Mertz started the company in 1953.

I started in 1973.

He left three or four years before I started.

He went on a six-month vacation to Australia.

He gave the reins to his daughter, Joyce.

and to one other gentleman, Lou Kislick, an executive at the time, and he never stepped foot in the company again.

He still owned it, and he still got all of the profits from it, but he never came back to the company.

All right.

Where do you want to start?

What was the idea in its infancy?

How did this thing start?

Okay, so how it started, Harold Mertz was 49 years old when he started, so he's an older gentleman.

He was working at Look magazine,

and one of his responsibilities was in charge of all the college students.

Just so people know, Look was a very big deal once upon a time.

A long time ago, and that is correct.

Yes.

So Harold March was one of his jobs was in charge of the college students going door to door to sell one single subscription to Look magazine.

And Harold March decided it would be easier if he combined magazines together to give the consumer a choice.

And he decided not to use the college students.

He used a mail order, and his first mailing was 10,000 pieces.

It had 20 magazines inside.

No sweetsteaks yet, no fanfare, no anything, just 20 magazines and a blurb about them.

And he got a 1% response, and that was the start of the company.

So people understand, 1% in virtually every other metric is a failure.

You got 1%.

What are you going to do with 1%?

In your line of work, it's rather encouraging.

Correct.

Partially because there's very little cost of goods being sold.

When you sell a magazine subscription, the publisher pays for

filling the subscription.

So, Look magazine in this case, once more people read their magazines, they engage with these outside entities, and those entities, it falls to them to find a more enticing way to present the underlying product.

That's correct.

So, you go from one magazine to a couple dozen?

Starting with 20, yes.

And you get 1%,

so Mertz goes, okay, we're on to something.

What happens next?

Next was the company grew for almost 50 years,

year after year, double-digit growth every single year for almost 50 years.

Who else does that?

Where else does that happen in the wide world of marketing?

In terms of double-digit sales, I don't know any other company that has survived 50 years of double-digit sales.

I couldn't name another company.

So in those 50 years, there was actually only one downturn in one year, and that was when a competitor came to play.

Was that McMahon?

That was American Family Publishers with Ed McMahon, who never worked for Publishers Clearinghouse.

He worked for our competitor.

Isn't that funny how the two are so conflated?

Even the news got it wrong virtually every single time.

Okay.

And we didn't like it, but that's the way it was.

That company started, actually, American Family Publishers specifically because PCH management pissed off a couple of magazine publishers, Time Inc.

specifically.

Well, that's a bad guy to pick a fight with.

Yes.

And they got so mad that they started American Family Publishers with

two other entities.

One is a family known as the Pritzker family, a family in Chicago.

The Pritzkers?

The Chicago Pritzkers, the owners of the Hyatt Hotel and the Caribbean

cruise lines and a whole bunch of

pharmaceuticals today?

Timing, the Pritzker family, and Meredith started American Family Publishers.

Meredith backed out at the very last minute.

The Pritzkers owned McCall's magazine.

That's the connection to the subscription world.

Yeah.

But we're going a little fast forward.

Yeah, we are.

Okay, so I want to get back before the sweepstakes became a thing because that obviously was a transformational moment.

But I want to talk to you a little bit about, full disclosure, I wanted you here because

I've been in or adjacent to your world most of my life.

I mean, I'm in the entertainment business now and, you know, it's a pretty crooked path for me.

My first real job, like the thing that gave me when all my actor friends were waiting tables, I was selling magazines over the telephone for a company called Dial America Marketing.

Okay.

You remember Dial America?

Absolutely, yes, yes.

And I felt, Daryl, like I had wandered into some...

I mean, it's a world that very clearly exists, this whole boiler room world.

And I'm sure you know it.

But most people don't.

Like everyone listening right now has picked up the phone and had someone try to sell them something before.

Yes.

But very few people listening have picked up the phone to try and sell something.

And it is such a world, it's such an experience.

And so, honestly, I wanted you here because I still have a little post-traumatic stress,

I think, from selling magazines over the phone.

I can imagine.

And I would just like to hear some things from you about what that's really like.

I mean, this guy, Mertz, he went door to door, which is a very different deal.

Well, I mean, the door-to-door, I mean, is, I guess, harder than selling over the phone because you've got to confront the person directly.

Well, the question is, would you rather have the phone slammed down in your ear or the door flung shut in your face?

Neither.

Yeah, I mean, wouldn't it be a little bit easier to say yes?

It's a little harder to say no to someone face-to-face than it is to just hang up on them.

True.

But when you're sitting there, Chuck, with a headset and just dialing, you're hitting numbers like you, you know.

I mean, the first one is more Willie Lohman.

You know, you're out there

with a suitcase and a smile.

They're all strangers, yeah.

Right.

You got a briefcase filled with magazines, and you're literally knocking on a door saying, what do you think?

Did you ever do that?

No, absolutely not.

My first job was at Publishers Clearinghouse in 1973, right out of college.

Why did you go there then?

What was it about?

I was taking a day off from looking in.

I live in New York.

I was taking a day off from looking for a job in Manhattan and I happened to see an ad for Publisher Clearinghouse.

Now when I started in 1973, they were a very small mom-and-pop company.

Let me give you an example.

At 10 a.m.

in the morning, the coffee cart would roll around.

I didn't have an office.

I was on a desk.

on an outside area and the coffee cart would come around at 10 a.m.

in the morning and it would go into an office.

And five of us would go in every morning to have coffee.

It would be me and Jeannie Clark,

the two marketing people in the company.

Two.

That's it.

In the entire company.

Our boss wasn't even in marketing.

He was a finance person.

Two people in marketing.

The three other people were the entire computer department.

Genie, Norman, and

Jack.

So five people in 1973 were the entire marketing department and the entire computer department.

And that's actually why I was able to get to know each and every one of these crazy vice presidents.

Because all of my work, I was a marketing analyst.

So I was analyzing how the mailings were doing and the tests and my reports.

There was no middle management.

There were only maybe 100 employees.

So my work went straight to all of the seven vice presidents.

Right out of college.

Right out of college.

What was your first day like?

Okay, I think you read the first

couple chapters of my book.

I did the stupidest thing anybody could do on the very first day.

I can laugh about it now.

I knew nothing about the business world at all.

What'd you major in?

I majored in math.

There weren't many math jobs back then.

I didn't want to be a teacher.

But I was hired fairly quickly by VP of finance, Alan Rabinowitz, who

was the most mischievous of the vice presidents.

And after my first day, I walked into his office and I said, Thank you, Mr.

Rabinowitz.

He said, Call me Alan.

And I said, Thank you for hiring me.

And I started to walk out and I turned around and I said, By the way, I think I deserve a raise.

Day one.

Day one.

I swear to God.

Bold?

What's Alan do?

Stupid.

Alan is

Alan became a very close friend and mentor.

He passed away early in life, so I knew him for about 20 years.

He was always known

to talk and for an argument.

Devil's advocate was a phrase that Alan would use all the time.

That's who he was.

At that moment, it was the only time I ever saw him speechless.

He said to me,

let me think about it.

I'll let you know tomorrow.

I'm just glad he didn't fire me on the spot.

I mean, looking back at it, it's just anybody out there, don't do that.

And yet, I mean, here you sit all these years later, you rose through the ranks.

And I just wonder if part of it is because this Allen guy understood that on some level, the company was being equally audacious with its customers.

You know, an unsolicited knock on the door, a phone call, an offer you can't refuse.

I mean, surely, what is it, ABC?

Always be closing.

You probably like that moxie.

One of my regrets, one of my only regrets is that he passed away too early for me to ask him that question.

Why did you not fire me on the spot?

Yeah.

I mean, and the raise, I was making $7,300 a year.

Okay.

And he gave me a $200 raise.

That was six cents an hour, I think, or something like that, if you do the math.

And I was thrilled.

Sure.

And my reasoning simply was that I have a twin brother, an identical twin brother, who started a job about a month before I did in Manhattan.

And he was making $500 more than me.

And I couldn't bear that.

That's got to be awesome.

And so that's how.

Yeah.

Yeah.

Yeah.

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All right, so it's 1973.

You're a math major.

You're making $7,500 a year, more or less.

And

we still don't have a sweepstakes sweepstakes component into this company yet.

We do.

We do.

Okay.

The sweepstakes started in 1967.

The first test of a sweepstakes by PCH was 1967.

And this will be interesting that

it wasn't actually PCH's idea.

It came from Reader's Digest.

Harold Mertz

This is 1967, about two years before he walked away, so Harold was still running the business.

and he saw Rita Zidas doing the sweepstakes,

and he saw them repeat it, so he said to his management team, the seven vice presidents, he said, let's try a sweepstakes.

So we tested it.

It did extremely well.

He called his management team together, all seven vice presidents, all of which I worked with,

and he said to them,

Whoever wants to destroy my business and continue with the sweepstakes, raise your hand.

Harold was not a person, he would listen to both sides of an argument

and then he would make up his mind on what he would do.

So that's exactly what he said to his management team.

There was only one person in the room who was brave enough to raise his hand.

It was the youngest person in the room.

It was a creative copywriter.

Basically, his name is John Minnick.

He became president many, many years later for a short time.

He raised his hand.

He gave Harold Mertz the argument as, no, it's going to generate a lot more sales.

Harold was concerned that he had a cash cow on his hand.

It was making a lot of money, a lot of sales, extremely high margin, because cost of goods was close to zero because we weren't manufacturing it.

You're selling somebody else's product.

That's correct.

He didn't want to jeopardize cash cow with poor customers.

And John Minnick made the argument.

And Harold said, okay, I'll agree.

Let's continue it.

But he said, but

everything we do has to be above board with honesty and integrity to the consumer.

I'll tell you one other thing, which is totally amazing.

And I had double and triple checked this when I heard this, when I started at the company.

The first sleepstakes mailing.

The top prize, $10.

Now, this was 1967.

Sure.

The odds of winning

A prize, the lowest prize was 25 cents.

The odds of winning a prize was one in 10.

But the top prize was $10.

When I started in 1973,

I believe the top prize was around $100,000 at that point.

And then over the years, it went up and up and up and up.

But still, $100,000 in 1973.

What's that?

And

current money.

It's a couple million bucks.

That was good money.

Yes.

That's real money.

I didn't realize that.

So in the early days, your odds of winning something were actually very decent.

That's correct.

Not much.

Like the idea of a

what is it like?

It's like a slot machine.

Pays off enough to keep you staying.

Yeah, right.

That's correct.

Right.

You're not going to walk out with giant bags of money, but you're going to be rewarded enough to stay in the game.

Yeah.

So did that model,

why did that model go from, or I guess maybe the better question is,

what did the odds become

ultimately?

Ultimately.

Good news and bad news.

Yeah.

In my day,

when we started to promote a million dollar prize and up to a $10 million prize, the odds of winning were,

I don't have the exact number, it was in the millions to one

to win the big prize.

And was the big prize a million or was it 10 million?

It reached 10 million during my era.

And stayed at 10.

Stayed at 10.

Okay.

Until today, which I'll get to at some point.

Today, however, I've been out of PCH for 20 years.

I retired early.

And

I check their website all the time to see what's going on there.

And the odds of winning today are much worse.

The odds of winning are,

I think it's 8.2 billion to one.

That's to save them money.

Wait a minute.

So the odds of winning something in 1973 were 1 in 10.

And the odds of winning today

are 1 in 10.

Well, let me restate it.

The odds of winning the big prize today is 8.2 billion to 1.

And how many prizes are there today?

Oh, there are dozens of other prizes.

The odds are better for those.

But the sales come from the big prize.

The more money you promote, it's like the lottery.

When the lottery goes really high, people stand online to buy lottery tickets.

The same thing with the sweepstakes industry.

The higher the prize, the more people are interested.

The little secret about sweepstakes that started probably from day one of sweepstakes is people think that you have to buy something to win.

You do not.

But many people you cannot convince that it doesn't kind of increase your odds.

And we're okay if people want to think that, I guess.

I think you're counting on it, aren't you?

I think what he's saying, Chuck, is it's this idea that as a as a participant, a player, you can put your thumb on the scale and maybe increase your

by, you know, when you send your stuff in, maybe include a little handwritten thank you note or maybe a little token of your appreciation or something.

Or say, you know, you're close to winning, don't miss your chance at entering.

The copy can make a big difference, and you got to be careful not to go over the line and do something that's unethical or illegal.

Well, I'm going to talk about that.

But I'm also talking about the people who are entering would send you guys handwritten notes along with the entry to try and increase their oh, we would get poems and we'd get

people would send in cakes and stuff to hopefully increase their chances of winning.

And we appreciated the food and the notes, but no, that didn't.

You weren't a little worried about what might be in those cakes or anything?

At that time, no, this is the 80s, 70s, 80s.

No, we wouldn't open the stuff today, but back then we shared.

So when then did you realize you guys really had a tiger by the tail?

Like when did it tip for you when you realized, good God, we're selling a product that we don't even make

through

the lens of a sweepstakes, which is really adjacent to a lottery.

Like you have no manufacturing costs.

Correct.

That is correct.

Every single thing this billion-dollar company is creating is an intangible

dreams, novelty.

The way that the economics worked for us for example if we sold a magazine subscription for ten dollars

in my day we kept eight dollars and we'd give the publisher two dollars now they'd have to spend twenty dollars to fulfill the subscription

but the two dollars was they'd like getting that but they more like getting the circulation publishers clearinghouse got so powerful that by the end of my era there my term there we negotiated down publishers down to 10% and some were 0%.

That's the problem we had with Time Inc.

They were getting a remit, we called it, of 20% of the sale and they wanted more.

And we said, no, we're going to give you less.

And it pissed them off.

And they started American Family Publishers and after a year or two engaged Ed McMahon and other celebrities.

I just think it's useful for people to understand the basics of this, that it's kind of like a customer acquisition cost.

If you're a publisher, what you really need is somebody who's going to not just order your magazine, but order it for years, week after week after week.

I mean, that's the essence of the subscription.

So these guys would go underwater.

They would overpay to get that person.

And then their whole model is what?

Just to make sure the magazine is good enough to keep that person reading forever and ever.

Correct.

I mean, most companies have to pay to get new customers.

We gave them a new customer and a dollar or two with it.

It was like found money to them and it increased their circulation.

The publishers make most of their money on the circulation.

So if we give them more subscribers, they can charge more for their ad rates.

So the more subscribers we gave them, the more they wanted.

In our heyday, we only offered about 100 magazines per mailing and there were 350 magazines wanting into the mailing.

So they would fight to get in the mailings.

And there was a time when they started to offer free premiums, calculators, and cameras and stuff like that, all on their dime, just to get them into our mailing because they had to get in past the other ones.

It was genius for the time.

Well, it's genius, and there's so many little things that are counterintuitive, like the complexity of a PCH mailing, right?

I got one once, and I was like, you've got to be kidding me.

Page after page, different fonts, different prints, like everything I had been taught was, this should be way simpler.

But I have to admit, 15 minutes later, I'm still with the materials.

Yeah.

I talk about that a little in the book.

We would, so our mailings generally had seven or eight components in each mailing.

It had the magazine flyers, it had the stamp sheet with the stamps, and it had a whole bunch of, it had seven or eight different components in every mailing.

And we said to ourselves, you know what?

If we could make it simpler, it would cost us less money in paper and printing.

So we tested simpler several times.

Never worked.

And the theory from one of our vice presidents, Tom Owens, a very, again, very mischievous character, his theory was that the more time a person spent with your package was like the more time the person spent in your store, the more chance that it would buy something.

So that's the theory.

Whether that's true or not, I don't know, but that's the way it worked for us.

Well, there's something, too, about the complexity of a thing translating into the legitimacy of a thing, right?

Like, nothing illegitimate could be this complicated.

I mean,

why would you do that?

You know, so you give people multiple hoops to jump through,

which I guess begs the question: as a math guy, you're probably just looking at the numbers, you're testing everything,

but

psychologically, there was so much going on in this whole relationship.

You know, were you testing the math or were you testing the underlying psychology of the material?

You know, we most of the testing was in the language, in the creative.

And it's interesting because we would we test it a lot.

We would have meetings once a month for the senior executives.

And even in my early days, I was part of that because I was in charge of marketing.

So I was in charge of marketing for the company.

Even when I wasn't a vice president, I was in on those meetings.

And we would have a dozen packages that our creative team had produced.

And we would look at them, decide which one we actually wanted to test.

And we would try to predict which ones we thought would work.

We could never predict which the winners would be.

If it tested and it worked, we did it.

But it's hard to tell beforehand.

Yeah.

All right.

So again, back to, I'm looking for the moment when you said to yourself, holy crap, this thing really is a monster.

This thing is a...

You know,

there was a progression.

When we first tested television support, I think it was in 1974, 75, a year or two after I started, I was in charge of reporting that test result.

And the test result was huge.

So that's when PCH in 1975 or so started television advertising.

That's when I and others thought, you know what, this cash cow is going to be many cash cows.

But at that time, we were still a small mom-and-pop company.

We were growing, but it was still small.

So that was the first progression.

The second was probably when we went to the $1 million and $10 million prize 10 years or so later.

That was a big plus.

But you guys weren't highlighting the winners yet, were you?

You know, we didn't really start highlighting the winners until the prize patrol.

Okay, that good, that reminds me.

The big hit was the prize patrol.

That was probably the single most important test and thing that we rolled out ever, except for the sweepstakes in general.

The prize patrol lifted us to another level.

And when I and we realized, I don't remember the exact moment, but I say in my book, we became the most loved company in America.

And I give examples of all the free publicity that we had.

It was Daily.

Everywhere.

It was Oprah several times.

It was Letterman.

It was everywhere.

It was

mentions in sitcoms,

Sears, Seinfeld, cheers.

It was on a daily basis.

Publishers Clearinghouse was discussed by the news.

And that's all free publicity.

So that was the third time.

There was a fourth time that I'll get into later.

That was a fourth time, but it was a

not a good move by PCH.

Perhaps we'll get into that later.

Okay, before we do that, though, so there's a time when you're not highlighting your winners.

Didn't somebody, didn't this all happen because somebody who won wanted to come and say thanks to the company?

And wasn't the company like resistant?

Yes.

The story goes that a winner called and this was probably in the early 70s, right around when I started,

maybe a little before, a little after, don't know exactly when.

A winner called and said they wanted to come and thank us for the prize.

And we were like, oh, really?

Well, look, well, I guess it'll be on your dime, but who's going to show him around?

So there was a kind of battle on the vice presidents on who would show the guy around.

And it was decided that it was Henry Cowan, an original vice president, and Luke Kislick, I think.

who was president at the time, agreed, okay, we'll take the person around.

And we took him around the building and showed him around, or they did.

And

Henry Cowan and Luke Hislick, the president at the time, loved meeting him and his thanks.

And the employees clapped when he

walked them around and showed us.

It was still a small company at the time, maybe 100 and maybe 200 employees at that time.

So that's when we realized that...

flying the winners out.

And that's really when the publicity started, still 10 years before the prize patrol, however.

Yeah.

The prize patrol just took it to another level where

we'd show a winner in a flyer,

say the winner's name, but nothing better than showing a live winner on TV.

No, and it seems so obvious today, but it had never been done before.

And the point that I want to kind of drill down on is that

you test everything.

All your materials are tested, retested, and you're generally wrong about what you think is going to work.

That's correct.

Absolutely.

So it's the idea, it's the idea that you actually trusted the customer more than your own gut.

And I think that's important from a, I don't know, there's some sort of abject lesson in there, maybe a humility, maybe just a born of experience, you know.

But

the idea that it never occurred to you to put your customers front and center until somebody reached out and said, I'd like to come and thank you.

It's just a basic expression of manners.

And even that was met with a certain level of skepticism.

But

you made them pay it

the first time they did yes.

They had to pay for the privilege of saying thanks.

That's correct.

And then what happened is like the vice president's, like the guy leaves, and they're like, you know what?

That didn't suck.

That was kind of fun.

Yeah.

So after that, we paid for the winners.

We flew them in and we wine and dine them.

And that started our winners' weekend, is what we called them.

We'd have a party in our cafeteria for them, introduce them to all the employees.

You know, the contest was still relatively new then.

We're talking about I started in 73, so it was right around,

we didn't start TV advertising until 74 or 75.

So that's when we started showcasing the winners.

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I love this so much because it's scary.

If you're going to showcase the winners and if you're going to be ethical about following the rules of sweepstakes,

then you can't control who the winner is,

which means you're liable to put on all of your mailings and on TV Cletus from Nebraska with not a tooth in his head,

okay,

who suddenly becomes the face of victory for your company.

You have no idea who is going to show up.

And so, like, that would make a lot of companies panic, but it was also so real.

If we had a winner that didn't look well on TV or we didn't want to promote, we didn't promote them.

I can recall one, and

it was around 1975.

We had a winner of $100,000.

He was an oil rig worker,

and he quickly spent money on a speedboat, a new car, drugs, and hookers.

He ended up in jail, and apparently he took a shotgun to the judge's house, and he ended up in jail.

We did not promote that person.

Yeah.

Yeah, I guess not.

But I just mean the care.

Like all of the testing you would do for your materials, you can't really do for your winners.

And so you wind up, by and large, week after week, putting very normal, average-looking Americans.

Could be you, could be your neighbor.

It just seems to me that that made a lot of people go, well, why not me?

I mean, if that guy, who knows?

Could be me.

Yeah.

We had a lot of fun with the winners.

We really did.

And there's a lot of good stories in the book, inside stories that people don't really know.

What was the culture like in the company at this point?

Did it get crazier as they became more profitable, or was it always a little nutty?

Yes, and yes.

It got crazier and crazier.

The workload was getting really, really bad.

So imagine

there was one year, we'll get into this a little later, one year where sales went up by 100%

in one year.

We didn't have a staff to handle that kind of sales.

So we went from when I started around 100 employees to

we had around 500 employees in the early 90s.

And then in the early 90s, sales went from 500 million a year.

The next year it went to 1 billion.

We never believed we'd even reached the half of the 500 million that we reached.

We were celebrating that.

And the next year we hit a billion.

The workload was crazy.

When I started, we had one mailing a month.

And that was it.

In 10 years, we went to 12 mailings a month.

We didn't have the staff to do that many mailings.

So the workload was crazy.

The fun was crazy.

So like direct marketing marketing conventions all over the country, that kind of thing?

Oh, yeah.

Oh, yeah.

Yes.

Yes.

The parties at PCH, I mean,

retirement parties or when people left to go to another company.

It got way, way out of hand.

How generous was the company with its employees?

The employees felt like family members.

So you know a lot of companies, right, Mike?

Do you know any other company that gave every single employee fresh cut flowers on their desk every Monday morning?

Well, I do that here at Microworks, obviously.

I'm going to decide.

How many do you got?

So that started in when Harold Mertz left, he started that.

And even when we rose to a thousand employees,

every Monday morning, every week, fresh cut flowers on every employee's desk.

The owners and the management team treated people like family.

They were very mischievous, as I said, very eccentric.

We all had a lot of fun together.

The camaraderie was unbelievable.

Give me an example of the stuff that management was doing that would either get them canceled today or just simply just couldn't happen in 2024.

Okay, well,

there are a lot to choose from.

I have two.

I'll give you one now.

You mentioned early about

somebody doing a speech to the company in his underwear.

Yeah.

Okay.

Let's tackle that.

His name was Dan Doyle.

I saw him a week or two ago.

I was doing a book talk at Port Washington Library where PCH was, and Dan Doyle came.

Was he clothed?

I thanked him for having his clothes on.

He was in the back of the room.

Good.

Sue Cook was an HR manager.

She was single.

attractive and young.

I think maybe around 30.

And she was leaving to go head the HR department at a company in Vermont and so we threw her a party.

She was an HR manager and everybody knew her and everybody loved her.

So we had this party with virtually all of the employees

and of course there were speeches and Dan Doyle walks on

and he introduces himself as Amos Woodcock.

He's wearing

there are pictures of this in the book because you can't make this shit up.

I can't believe I have pictures of this stuff.

He walks on, he introduces himself as Amos Woodcock.

He's wearing a coonskin hat,

a woolly vest that's open, that's showing his hairy chest.

He's not wearing a shirt.

He has black boots on, and black socks, and bikini underwear.

No pants.

And he

wants to show Sukkok Cook, who's sitting in the front row

the kind of young men she's going to meet up in Vermont.

Oh, by the way, he also walked in, he's carrying a chainsaw.

Oh, there you go.

Okay.

The picture doesn't include the chainsaw, but he had a chainsaw.

He put down when he started making the speech.

So he's making the speech, and at the end of the speech,

he walks up to Sue, and everybody could see this, but couldn't really make it out.

But we got closer to Sue he gave her a little going away present

and

he had hand carved her a necklace

I'm a little embarrassed to say it of a man's genitals I see

a large necklace

that he had around his neck of course yeah

and he walked to the front row to Sue Cook

and he put it around her neck as a present.

Like a leg.

Like a Hawaiian greeting.

Correct.

She turned as red as I've ever seen anybody else in their entire life

now before I go on I want to show you something all right

I'm a little embarrassed to do this I can tell you're all you're all twisted up

god please be a woodcock my PR guy said I should do it

The picture does not do it justice.

Never does.

Oh, it sounds like wood.

He hand-carved this, and this is what he handed Sue Cook.

She loaned it to me.

Well, that's fantastic.

Okay.

Amos Woodcock.

Could you do that today?

Well, you just did.

You did.

Oh, geez.

Wow.

What do I mean?

No comment.

Am I right?

The picture's in the book, but it doesn't do it justice.

No, no, it doesn't.

What became of Sue?

Where is she these days?

She's somewhere up in the middle up in Chicago, actually.

She sent that to me.

She's removing splinters.

I do need to send it back to her.

It's only on loan.

Yeah, okay.

That's just one example.

There were many.

Can we have one more?

You want one more?

Yes, please.

Oh, geez.

I mean, he kind of kicked the door open with the Woodcock.

I am curious to see where he goes now.

You come out of the gate with that.

Yeah, where do you go?

So the other one, and this is probably my second favorite one,

is

you want me to put it back in here?

No, no, no.

Let's keep it out here just in case people are scrubbing forward.

You know, I'd hate for them to miss it.

Apropos of, I mean, since we're on the topic, wasn't there like a Cyclops layer?

Oh, yes.

What was the statue?

Greeted people.

There's a picture of this in the book.

When you went into the front front of the building, the first thing you saw was a nine-foot statue of a fully naked, one-eyed Cyclops with his hands out holding a fish.

Look, by definition, Cyclopses are typically one-eyed, right?

Yes.

All right.

So that part was not unusual.

It was unusual.

But which eye are we talking about?

I think the one in the middle.

The one eye?

Or the one eye?

He was anatomically correct, except for the one eye.

That eye usually is the one.

And that's the first thing you saw saw when you walked in.

And I actually had a chance to ask Lou Kislick, former president,

several years ago, why Harold Mertz put that in there.

It's a good question, man.

And Lou Kislick told me it was the mischievous little leprechaun in Harold Mertz.

The story I like to tell about the Cyclops.

Look at this thing, man.

Oh, yeah.

You've got a Cyclops holding a giant fish.

That's what I said.

And one eye.

The other story I like to tell about the Cyclops.

No, wait, wait, wait.

I don't understand.

I mean, just mind, I'm living my life.

I'm minding my business.

I walk in the lobby of PCH, and I'm greeted by just a full-on set of male genitalia.

A statue with one eye holding a fish.

And I'm supposed to somehow make some kind of correlation into what?

The corporate culture, my odds of winning, the joy of magazines.

What does it mean, man?

What does it mean?

Lou Kislick didn't give it to me.

He just said it's the mischievous little leprechaun in Harold Mertz.

I don't know.

That's not a leprechaun, dude.

That's a fallus, man.

I mean,

this is

next-level mischievous.

That's maybe where all the mischievous started.

I don't know.

That came from Harold Mertz.

I will say that the new management team and the new company does not have the statue anymore.

Where is it?

We don't know.

Unclear.

I asked at this book talk a couple of weeks ago in Port Washington.

There were about 75 people.

Many former PCHs were there.

Some original PCHs were there, hired by Harold Mertz himself.

I asked them, and nobody knows where the statue is.

All right.

Yeah, I don't want to gloss over the, I mean, it's not just,

maybe it is just childish frat behavior or something, but the importance of a sense of humor, however sophisticated or not,

you know, it seems to be missing today from so many companies.

And I'm not suggesting that, you know, Amos Woodcock needs to make an appearance in the halls of Google necessarily, but life was more interesting, right?

When you had characters like Dan, what's his name?

Just Dan Doyle, absolutely.

Yeah.

I think the camaraderie and the friendship is not the same today as it was back then.

I still meet once a month with five old-time PCHs,

two of which were hired by Harold Mertz in the 60s.

I have lunch with them every month together.

There's five of us.

Where do you go?

Local place, just a local place.

New York, Long Island.

Some local place in Long Island.

Yeah.

When we get together, it's funny because people around us will like

We just gab and gab and gab about the old days.

It was so much fun.

And people look at us and once somebody got up and walked over and said, what are you guys talking about?

You look like you're having so much fun.

But

it's another one of those things that's hard to articulate that's unique.

Like I saw it on Dirty Jobs all of the time in a different way, a kind of band of brothers mentality that you'll find in the sewer or on bridge work, you know.

But marketing's no different.

And I've been thinking a lot about, I don't know if I'm the right guy to do it, but somebody needs to write a tell-all like you did about Dial America marketing and the wide world of telemarketing.

And somebody should probably do it for the home shopping industry, too.

I spent three years on QVC in the middle of the night selling whatever they brought me.

And I bring it up because now

when I cross paths with people who were doing that 35 years ago, same time I was,

we now kind of realize we were pioneers.

We had a front-row seat to a whole new level of communication and sales that hadn't existed before.

And

it's interesting to be able to look back with people who were there.

And I just think it's great that you're doing that at this point in your life.

How old are you now, if you don't mind me asking?

73.

73 years old.

Interesting.

Didn't you start in 73?

I did, actually.

That's a big number in your life, Darrell.

Yeah, and I retired 20 years ago.

I was 51, retired young.

Isn't this thing 73 centimeters?

I'm not, I don't know.

I can tell you it's not.

You don't even know what six inches is, do you?

Yeah, I'm told it's about.

Yeah, I like that.

That's right.

Anyway, so here you are in the midst of this evolving behemoth.

It's politically incorrect.

It's fun.

The management seemed super generous with its employees, but they were also, I mean, there was a lot of philanthropy within the company, too.

Yes.

So the owners were very philanthropic.

I actually, I calculated this myself.

Many times they did stuff anonymously.

They didn't do it to make a name for themselves, although their name is on many buildings at this point and stuff like that.

But I calculated when I wrote the book that over their lifetime through today, the Mertz family has given away almost $1 billion to charity, the arts, and social causes.

Wow.

And they were very active in the arts as well.

Was it tied in to

like the transactional,

what am I going to say?

Cause related.

Did you guys use cause-related marketing?

No, we never did that.

We thought about it once.

We had a competitor.

After AFP started, there were several other competitors that started multi-magazine business.

One of them was called Great American Magazines, owned by Avon, actually.

And

their

promotion was they would give $1 to a worthy cause for every subscription you bought.

And I remember saying to the management team, why don't we tout what the Mertzes do?

And the answer was, no, they don't do it to get their name out.

They don't want to do that.

I will say this in terms of their giving.

When Harold Mertz left the company in the late 60s, around 1969,

he never stepped foot in the company again.

He mandated that 40% of company profits go to charity.

That was in 1969.

40%.

40%.

And that was just for his share.

His wife owned the other,

I don't know, half or what, but owned a large piece as well.

He guaranteed that 40% of company profits had to go to charity.

And they gave away almost a billion dollars.

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I think it's important to acknowledge, and I'm glad you did it, but the same mind

that

was that philanthropic was the guy that put a Cyclops in the lobby that's partially erect to greet all of the customers and friends.

These things live in the same brain in the same company.

You know what?

There is one gentleman, his name is Burt Rowley, that I'm going to see in a week or two.

He's part of my group of lunch people that I have.

He worked for Harold Burtz.

He was at that meeting in 1967 about sweepstakes.

I'm going to ask him that question.

What's the relationship between the cyclops and the giving?

And I'll be curious to see what he says.

I'll ask him.

It's got to be something to do with the fish.

It's the fish, man.

I mean, maybe it's a teach a man, feed a man a fish or teach him to fish.

Maybe there's something there.

But then again, there's just this partial erection that's just constantly right in the midst of the whole thing.

It's just, I just don't know how to square it with fishing in general.

So

let's go to the prize patrol.

Yes.

Whose idea?

Can you walk it back to one person's prize?

Absolutely.

One person.

His name is Todd Sloan.

The prize patrol almost didn't happen.

Todd Sloan was a junior-level employee.

I'm guessing guessing he was probably 25.

He had started a year or two before he had the idea.

He came to my office.

He worked in one of my departments, not directly to me.

He worked for a manager who worked for another manager who reported to me.

He came to see me.

He was working in the marketing department.

At that point, the marketing department was 40 or 50 people compared to two when I started.

And he said to me, he loves advertising.

He wants to shift to the advertising department.

We had one person in the advertising department at that point.

Isn't the whole company an advertising department?

Well, yes, but we had one person whose title was advertising manager.

His name was Dave Sayre.

And he would be in charge of awarding the prizes, not via the prize patrol yet.

So I tried to talk Todd out of going to the advertising department because marketing was, that's who we were.

And Todd disagreed and he went to the ad department.

And the first idea he had was the prize patrol.

How did he pitch it?

Like what was the...

He went to Dave Sayre, his boss, and he said, we're about to surprise a winner.

I think the family's name was Yancey.

That's the last name.

We're about to go to not surprise.

We're about to go to a winner to give them the money for the prize.

We've already told them, but

next time,

why don't we surprise them, not tell them in advance?

And film it.

Yes.

And Dave said, that's a crazy idea, but let's try it.

So Dave and Todd on the next prize visit went to surprise the winner.

Dave had a large check.

Todd had his own

video camera.

This is in the mid 80s, I think.

Like 85.

It's so gorilla.

And in the background is Amos Woodcock standing by.

And when he showed the film when we got home, it was like we knew it was gold.

We absolutely knew it was gold.

Now, at that point, it wasn't live,

but it was edited.

It was not till several years later where Todd had another great idea.

This is going so great.

Let's do it live on the Super Bowl.

Oh, my God.

And we were like, no, no, no.

What could go wrong?

Somebody could jump out with the, you know,

yeah.

And, but

we agreed, and that's when we started the live Super Bowl.

So that went live on the Super Bowl?

Yeah, we did it on the halftime show.

Wow.

No, no, no.

It wasn't halftime.

It was at the end of the game.

We didn't want to pay the money for the halftime.

We did it post-game, actually.

Mid-80s?

Mid to late 80s?

I'm guessing late 80s.

Yeah.

Because the price

started around mid-80s,

as I'm guessing.

So, what was the impact of that post-game spot?

Huge.

Everything we did was tested, and it was huge.

That's why the double-digit sales every year.

Every year, double-digit.

And not just 10%, 20%, 30%, 40%,

every year, year over year.

What the hell went wrong?

Boy, wrong.

Oh, geez.

It was

the late 1990s,

and our competitor, American Family Publishers,

decided to do something that was what we'd call over the line in

their copy.

Is this the eight-letter word?

No.

Okay.

You want me to go back to the eight-letter word?

I do.

It's earlier?

Okay.

I do, I do.

I will.

It's important.

In terms of the chronology,

there are two things that went wrong.

The first thing that went wrong had to do with

how ethical the company was.

So it was the early 90s

when this happened.

What I say in my book is the company started to go from integrity-driven to pure greed.

It started with a single event and an eight-letter word.

Okay, yeah, yeah.

And we had a single word that gave us a 100% 100% increase in sales.

Most tests would give you a 5% or 10% or 15% increase.

No test had ever given a 100%.

Maybe the sleepstakes did back in the 60s.

I don't really remember.

But it was huge.

We didn't believe it.

So we tested it again.

Is this the F word?

We gave it again, no.

We tested it again, and it gave us 100% lift.

So the word was finalist.

That's the F word.

What'd you think I was talking about?

Well, it wasn't the four-letter F-word.

No, no, you said

it.

You said eight letters.

Correct.

Finalist.

It was finalist.

Yeah.

So

diabolical.

Mike Rowe,

you're a finalist in the Publisher's Clearinghouse Sweet Stakes for $10 million.

That word finalist gave us 100% increase.

Now the question was, should we do it?

Should we use it?

in our mailing.

It just so happened at the time.

Who's in the room

questions posed who's in the room seven vice presidents okay including me I was VP of marketing at the time it was my job at the time and for the past 15 years any major mailing I would recommend the theme

and the headlines not the copy just the theme basically gotcha it was my job to recommend to the six other vice presidents what we should do in the major mailings so we had a meeting on this what we should do.

It was the bloodiest battle.

We had a lot of arguments.

The management team loved to curse, but all in good fun, except for this one time.

This was a bloody battle.

Whose idea was the finalist?

Where did that originate?

One of the writers, and I don't know which writer, one of the writers came up with it, but we tested everything.

So we tested it.

We didn't really think about it.

We just, we tested hundreds of things a year.

So it was a test.

I didn't even know it was tested until we saw the result and oh,

and we found out, you know, how good it was, and it was due to this one single word.

So I'm in the room.

I have a written recommendation that I wrote out to them

that I lost a lot of sleep over the night before deciding what to recommend.

It's in writing.

Wish I had the report.

I don't.

I knew we wouldn't walk away from it completely.

It's too much money.

On the other hand, Harold Murch would roll over in his grave if we did it.

Because, I mean, just so people, not to put too fine a point on it, but of course you're a finalist along with millions and millions of other people.

Correct.

We're all finalists.

That's correct.

Okay.

That's correct.

So my recommendation was to

let's use it sparingly.

Let's do it twice a year in the big mailings.

Let's use added disclosure.

Let's say you're a finalist, Mike Rowe, along with all other timely entrants.

Or some creative words, I didn't want to write the copy.

In the smallest imaginable.

We certainly wouldn't say along with, you know, 100 million other consumers.

We wouldn't say along with it.

Or anyone who's totally fog in a mirror.

And that was a compromise, and there was a bloody battle.

The president of the company at the time, Bruce, I'll use his first name only.

He's president of the company, and he is vehemently opposed, as is most people in the room, that we're already at record profits.

We're already at record profits.

Why do we want to go over the line and do something that is so clearly deceiving?

Well, that'd be greed, wouldn't it?

Well, the decision after the bloody meeting was that we would go along with Darrell Less's recommendation.

Great.

There were were one or two people that fought to use it, by the way.

I won't use their names.

The chairman, Robin Smith, at the time,

decided, okay, we're going to go with Daryl's recommendation.

Two days later,

never seen my boss Bruce.

who's a good friend and mentor.

I never saw him angry.

He barged into my office and he was red-faced and he was like beyond himself.

It was decided that we're going to use this word finalist in every single mailing.

Now at the time we were having three mailings a week.

Three mailings a week.

So we weren't going to use it twice a year.

We were going to use it three mailings a week.

150.

Behind our back.

Times a year.

And we also, at Publisher's Clint House, we never made major decisions behind people's back.

We fought in front of people, and then we made up our mind.

And the boss would make up of their mind.

Somebody went to Robin and convinced her to use it in every single mailing, and that's what we did.

That's the moment in time when we shifted from integrity-driven to pure greed.

It didn't happen overnight because the old management team was partially still there.

Yeah.

But a few years later, when they were all gone, and today it's not the same integrity-driven company it was back then.

Now, I will say this:

it added a lot of money to the bottom line.

I imagine it did.

It's the primary reason we went to a billion, over a billion dollars in sales.

We stayed at that level.

Let me say this, by the way.

We only used it for two or three months

because we got several lawsuits from attorney generals

and we decided immediately to stop using it.

So we only used that word for two or three months in our mailings.

But even so,

it got us to over a billion dollars in sales and we stayed at that level for several years.

We were fined by the attorney generals.

We were fined $490,000.

Chump change.

It added over over $100 million

to profit.

Not to sales.

To profit.

Wow.

So

the bonuses that year were fairly generous, you could say.

Although many of us weren't happy with,

I mean, we didn't turn back the bonus.

We cashed the checks.

Yes, I'm asked that a lot.

Did you cash the check?

Yes, I did.

But we weren't happy.

The way I describe it in the book, it's like a

wealthy relative passing away

and inheriting a lot of money from them.

You feel really bad for the person, especially if you feel close with them.

Yeah.

But would you like that in 20s or 50s?

Exactly.

Describes how I felt about that whole situation.

So that's why you say on the back cover at some point, you reference a morality tale.

Yes.

Isn't it interesting, though, how these things, like you said it didn't happen overnight.

It never does.

It's a frog in a boiling water and it all comes down to a word and it comes down to a meeting not unlike the many meetings you've had and you know this gets a little heated but in the end and then it just tips

do you feel like you knew in that moment that oh crap you know we're not going to get the poop back in the goose here or was it salvageable

no i thought it was salvageable

it wasn't until the president left

several years later,

that's when it started to change.

All right, well, that's going to be my next question.

But just a quick sidebar, because I'm really stuck on this and the way history remembers moments like this.

You know the story of Avis, how they got to be number two?

No.

It was an ad guy.

Similar to the guy you described, not at the top of an agency, just a guy.

And the rental car space was very, very

noisy and competitive.

And there was Hertz and there was everybody else, you know.

And this company came along and they were like, well, how are we going to cut through?

And rather than say they were the best, they said,

we're the second best.

We're number two.

We try harder.

We have to.

We're number two.

Wow.

That's a really good

one.

Except they were actually like number 27.

All right.

Well, so they go out into the the world, right?

And they make, on the one hand, a claim that is wildly inflated, but on the other hand, it's inherently modest.

We're not saying we're number one.

We're the bridesmaid.

We're number two.

We try harder.

We have to.

We're number two.

Within a year, they were number two,

because they said they were.

Right?

And so you could look back on that.

and say that was deceptive, that was fundamentally dishonest when you said it, or

you can say, look, we're in a capitalist society.

Caveat, I'm tour,

right?

I mean, be skeptical, be reasonable as a consumer.

Don't take everything you hear, right?

So how do you think about it?

How do you make the argument?

And I'm guessing the answer is what comes next.

The challenge I had and some of the executives had were we were taught from day one to be integrity driven.

That Harold Mertz was, he wouldn't do anything that would deceive a consumer.

That was totally against his philosophy that he ingrained in the vice presidents.

But those vice presidents were virtually all gone at that point.

And that's why it kind of shifted.

So

and it stayed at the high watermark for several years.

So I thought, okay, we'll ride the gravy train until the real collapse happened.

All right.

Well, let's go to the real collapse then, because this sounds like the iceberg that the Titanic hit.

But the real collapse happens in the failure of, well, where are the lifeboats and what do we do in the wake of all this?

And this happened literally overnight, not over days overnight.

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It was late 1990s.

So once again, we had seven years, seven or eight years of over a billion dollars in sales.

I will say we weren't growing at double digits then.

We were just happy we were at a billion dollars in sales.

I mean, we were turkeys for everyone on Thanksgiving.

In the early 90s, we had 500 employees.

We finally managed to

add to the staff where we went from 500 employees to 1,000 employees.

It took several years.

It was the late 1990s.

And may I again just say you have 1,000 employees in a company that doesn't make anything?

Correct.

Just saying.

Okay.

How many people does it take?

to facilitate a dream transaction.

You're selling hope.

Yes.

You're not even selling magazines.

You're not even selling paper.

You're just selling an idea.

Yeah.

Unbelievable.

So it's the late 1990s.

We're at a thousand employees.

We're cruising along.

And I'm senior vice president at this point.

The workload is finally starting to get a little manageable because we staffed up and the bottom dropped out.

Overnight, we went to Red Inc., virtually overnight.

And the story is that a gentleman, gentleman, his name is Richard Lusk,

I think it was in his early 90s,

flew from California to Tampa, Florida to collect his prize from American Family Publishers.

That was our competitor with Ed McMahon, who never worked for Publishers Clearinghouse, by the way.

He flew to Tampa.

He had gotten a promotion piece that said, quote,

you're in a two-person race, Richard Lusk won the person to win the $10 million prize.

That was the headline.

Clearly deceptive.

There were apparently,

in that timeframe, there were 25 consumers that flew to Tampa.

But Richard Lusk was the first.

He probably wasn't the first.

He was the first that was televised.

His family was worried.

He flew by himself.

They called the press.

It's unclear.

Is this a PCH PCH ad or is this an American Family Publishers?

This is an American Family Publishers creative package.

Uh-huh.

So it wasn't ours.

You didn't even do this.

We didn't do this.

Okay.

This incident caused the avalanche of hatred and lawsuits.

Since we were the leader in the industry,

the press came after us.

They knew who Ed McMahon was, but they thought he worked for PCH.

So the press attacked PCH and Ed McMahon.

They didn't really attack American Family Publishers.

So we were attacked.

So it's a mistaken identity.

The whole sweepstakes industry was attacked, especially us.

We were sued by every single state attorney general,

some individually, some multiple times, banded together.

We couldn't get them to agree on a resolution.

So is this a class action or 50 individual suits?

Yes, and yes.

There were also class action lawsuits against us, in addition to the Attorney General lawsuits.

So, what I say in my book, we were at one time the most loved and one time the most hated.

We had more negative press about us than any other company in history.

And here's my proof.

I'll give you two examples, and I give these in the book.

There were two events in the past that come to mind that there were bad incidents.

It was the Valdez oil spill.

That was a bad one.

That was a bad one.

Yeah.

Okay.

BP sales went down by, I think, about 25%.

The other one was Toyota, sticking gas pedals.

Oh, right.

Killed some people.

Yep.

Sales went down 10%.

Our sales went down 50% overnight.

And

their negative publicity lasted two or three months.

Ours lasted almost three years.

We couldn't get the attorney generals to agree with themselves.

We'd get them to group together and agree, and then the other group wouldn't agree.

So we couldn't get them to agree.

At one point in time, we thought we had it solved.

We had a national class action lawsuit settled by a federal judge.

It was settled.

I was actually in charge of the operational part of the settlement.

We had to mail to all of our customers.

We had to mail to 43 million customers and offer them refunds.

Sidebar, what's the culture like now?

What's the environment like during this time at PCH in the hallways, in the cubicles, in the meeting rooms?

Three words.

Chaos, chaos, and chaos.

Okay.

Yeah, no, it was bad.

And we had just staffed up.

A thousand people.

Yeah.

So the first thing we did is we had our first round of layoffs, and then a second round, and a third round, fourth round, a fifth round.

Two and a half years of this hell.

We fought the class action lawsuit, which was right around the time of the Senate hearings on sweetsteaks.

We thought it would resolve the whole situation.

You know what it did?

It made the Attorney Generals even madder because they didn't get any money from the class action settlement.

They want their pound of flesh.

So they came after us even more.

And the Senate hearings,

they ripped us apart.

I will say this,

to give Publisher Cleaninghouse some credit.

We did have a solution to the problem.

By the way, the Richard Lusk situation,

at the time,

there was a discovery of...

quote, older consumers addicted to sweepstakes.

That's a thing now.

There's an addiction to sweepstakes, and it's generally older consumers.

And so we were in the press every day about this stuff,

showing old people

with tons of magazines and merchandise we were selling at the time in their houses.

So it got really bad.

So we had a solution.

We called it the High Activity Suppression Program.

We had started it

about a year before the Senate hearings.

And any consumers that were ordering too much, we eliminated.

I was, in fact, put in charge of that program.

I was in charge of most of the important programs because anything important they usually gave to me.

So I was in charge of the high activity program a year before Senate hearings.

We're eliminating these seniors.

You're trying to get ahead of it.

We were trying to get ahead of it.

This was before the Richard Lusk incident, by the way.

We presented it at the the hearings.

Debbie Holland, who was a VP of Creative at the time, presented it.

We already did this.

The Senate had shown

10 or so witnesses, older consumers, or their kids, who are presenting their cases to the Senate.

And Debbie Holland

got grilled by the senators.

And one of the things that She showed them was the high activity and said, you know, this guy that just came on, we eliminated him a year ago from our program.

If we and every other sweetstakes marketer does this, it's solved.

Has

a high activity suppression program,

an internal mechanism designed to take those customers who appear to have some sort of addictive

personality.

Take them off your list, don't mail them anymore.

Senators

didn't care.

They just didn't care.

Well, you weren't a sympathetic entity at that point.

You got Lusk, 90 years old, gets on a plane, goes to Tampa, got his ticket in his hand.

It's me and one other guy.

I'm just here to get my 10 million.

Absolutely.

And that's it, man.

Yeah, yeah.

So we had like five rounds of layoffs over two and a half years.

What's your standing like at this point?

I mean, is there a little bit of I told you so going on in the mind of Daryl Lester, right?

You're walking around PCs like, I told you, I told you guys, this finalist thing.

No.

X nay on the analyst day.

No, and the reason why, because finalist was seven years earlier.

If it were a year later, maybe I would have felt happy.

Come on, man.

There's no statute of limitation on I Told You So.

I never actually felt that way.

I didn't.

Not even a little vindicated.

Not even like with your buddies at lunch next week, you're going to be sitting around going, hey, you know what?

You remember that time I called this thing seven years ahead?

The one thing I do say, and I don't know if this is true, is I say, because I've wondered why did AFP, our competitor, do that package.

It was so deceptive.

And my only conclusion is they saw us do finalists.

Once again, this is

it.

Now, this was seven years earlier, by the way.

So it's a long span of time.

And they finally said, well, they got away with it.

So maybe we can get away with it.

I don't know whether you do or not.

No, of course not.

It's true.

Of course it's true.

I just sat here the other day and talked to the guy who wrote a book about the Christmas story.

You know, that movie, and there's that scene at the flagpole where they dare, and then they double dare, and then they triple dog dare, and then, you know, one hops over the protocol.

Well, this is how everything always, from the history of people with pointy sticks, went at each other.

That's how it escalates.

Okay, so maybe we were the cause, but I, you know.

Well, you could go back before that, though.

I mean, I could probably go all the way back.

Somewhere, there's a statue in somebody else's lobby that makes that Cyclops with a partial erection and a fish look positively G-rated, right?

Because somebody saw that and were like, you know what, if they can do that in their lobby, we're going to have a human sacrifice in ours.

Yeah, okay.

I mean, this is just how people work.

They can't help it.

It wasn't enough to give people a one in ten chance of winning something.

It wasn't enough to have it $100 or $100,000.

A million wasn't enough.

$10 million wasn't enough.

It wasn't enough to give people tours who come to your facility.

We got to go out with cameras.

And it wasn't enough to do that.

We got to surprise them.

And that's all.

We got to put it in a halftime show.

But I was just struck by something, too.

I don't know if

the rhyme of this occurred to you, but how interesting that

a guy picks up the phone years ago and says, I want to come see you to say thanks.

Juxtaposed with an old man named Lusk who gets on a plane to essentially go to your competitor to get his prize.

In the end,

it's a tale of two customers.

One, years ago, who wanted probably as a result of being well-raised and well-mannered to simply say thanks.

And the next,

coming to get his booty.

I mean, come on, man.

That is operatic.

Yeah.

That was the downfall, and it lasted two and a half years.

When I left the company, we had finally made it to around break-even when I left.

I was proud of that fact that we had made it to break-even.

Now, how many were working there at the time?

Six.

No, when I left,

we were down to around maybe 500.

Yeah.

Back where you kind of started

before the great finalists.

That is correct.

Yes.

Yes.

Amazing.

Yeah.

Amazing.

One little word.

Yeah.

Wow.

Okay, so why'd you write this book?

I'm going to end with the question I started with.

You got 30 years in.

You got some distance from the company now.

I assume you've got good lawyers.

Your publicist here probably hoping, God, we better sell some books.

We're going to have to put together some sort of legal defense fund.

Well,

the book is a first step.

My ultimate goal is to blockbuster movie.

Maybe a TV docuseries.

Sure.

The story is fascinating with the highs, the lows, the comedy, the winners, the prize patrol.

It's an amazing mom and pop story, how great they became and how bad it became.

And my ultimate goal is a movie.

Let's get it.

Let's a movie.

Let's get it done.

I'll do whatever I can to get the word out.

I mean, people will watch this, but I mean, you should put your foot on the gas.

This is an unbelievable story.

My only request is a chance.

I don't even want a part.

I just want a chance to audition for Amos Woodcock.

Amos Woodcock.

Okay.

I just want the opportunity to strap this thing on, as it were.

You got it.

I have promised my identical twin brother that he could play me as long as he loses 10 pounds.

Terrific.

Wow.

I mean, I could talk to you for hours because I have this notion in the back of my head, too, that, you know, I told you about Dial America, but boy, the home shopping industry is sitting right there.

What a story.

And we went through the same things, Daryl.

Like we, I mean, at least I did, and I think my bosses were doing a similar calculus when they realized like the number of sweet little old ladies who were so completely addicted to the television, right?

And enamored of the hosts.

This too was live, like your spot in the Super Bowl.

It was real, you know?

yeah.

And you live in the middle of nowhere and you're lonesome and you're flipping around, and there's a nice person looking into the lens of the camera telling you that this cup, I mean, sure, it just looks like a cup, but look a little closer and imagine the joy it could bring you if you fill it with just the right beverage and enjoy it with just the right company.

And suddenly, you're in a relationship.

You could sell anything.

Mike has no experience in sales.

I'll tell you, ma'am.

Final thought really is that the other reason I wanted to just to have you here is because I'm all of that's behind me, except not totally.

In the end, all businesses are in the business of persuasion, and all business cards, if there were any truth in them, would say salesman underneath the person's name.

That's what we do.

Whether I'm running a nonprofit foundation, trying to get people to think a little differently about the definition of a good job, trying to close the skills gap, or just trying to sell a collectible doll or a piece of capital Monty or a magazine subscription.

Trying to get by.

Right.

It is, as the back of your book says,

capitalism is a

there are a lot of sharp elbows.

And what a story, man.

Billions to where are they now?

Where is PCH

as we speak?

They're in trouble.

Financially, I'm guessing.

About three months ago, three or four months ago, they

announced in the press

massive layoffs.

This is a couple months ago.

They laid off a third of the staff.

I hope they survive.

I don't know if they will.

I really do hope they survive.

I love Publishers Clearinghouse.

It made me who I am today.

It was a fascinating life because of them, the 30 years I was there.

25 years up, that roller coaster ride up was 25 years of fun.

It was, you know, five years of hell.

But, you know, you go through the hell and you go through the ride up.

It's worthwhile.

So I hope they make it.

I did see one sign recently that makes me even more worried.

It appears to me they no longer promoting a $10 million prize.

They're only promoting a $1 million prize.

I can't imagine why they would be doing that.

I noticed this about a week or two ago.

Maybe it's not true.

It appears to me they are only promoting a $1 million prize now.

Now, the only reason they would do that, in my opinion, would be if they can't afford to fund the $10 million prize.

That's speculation on my part.

I have no idea.

I hope they survive.

I hope the movie gets made.

I really do.

It's a terrific book.

It's called Downfall of an Icon,

the True Inside Story of Publishers Clearinghouse.

It really is operatic, man.

Well, thank you for having me.

This has been, I love talking about my second home, is what I call it.

Yeah.

Well, you had a front row seat to something that might turn out to actually be important.

And, you know, I don't think the story's over.

I mean, as long as people are hoping and dreaming,

right?

Agreed.

Well, here's the hopes and dreams.

This wasn't a gift, was it?

No, I need to get that back to Sue coke she's she said i could keep it for a couple of weeks somebody's depending on getting that back so but i have just the tip no no

oh yes sue if you can have it it's okay no no look i i would not want to take that off sue's hands thanks for listening folks back at you next week thank you mike

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